Azerion publishes interim Q1 2023 results Business News
6.3%
Message from the CEO
"I am pleased with our continued growth in underlying profitability in Q1 2023. We made significant progress integrating previous acquisitions and further optimising our operations, whilst releasing new products and services to our current and new advertising and publisher partners. We are working hard to make our platform more efficient, better serving our clients, increasing our resilience and positioning us to capture exciting market opportunities. We expect to continue improving our underlying profitability in Q2 2023, which provides us confidence in achieving our strategic and financial objectives for 2023 and beyond." - Umut Akpinar
Financial overview
Net revenue
Net revenue for the quarter amounted to 113 million an increase of approximately 19%, compared to Q1 2022, mainly due to growth in the Platform segment.
Earnings
Adjusted EBITDA was 8.7 million for the quarter compared to 5.9 million in Q1 2022, an increase of approximately 48%, reflecting improved margins due to accelerated integration of previous acquisitions as well as cost optimisation.
The operating loss for the quarter amounted to (7.7) million, compared to a loss of (144.9) million in Q1 2022 mainly explained by 141.6 million of one-off De-SPAC related expenses incurred in Q1 2022.
Cash flow
Cash flow from operating activities in Q1 2023 was an inflow of 27.4 million, Cash flow from investing activities was an outflow of (24.9) million, mainly due to acquisitions. Cash flow from financing activities totalled an outflow of (3.1) million.
Capex
Azerion capitalizes development costs related to asset development, a core activity to support innovation in its platform. These costs primarily relate to developers time devoted to the development of games, platforms, and other new features. In Q1 2023 Azerion capitalized 4.6 million, equivalent to 15.9% of gross personnel costs, which is broadly in line with previous quarters.
Financial position and financing
Our net interest-bearing debt
*)
amounted to 177.4 million as of 31 March 2023, mainly comprising our outstanding bond loan with a nominal value of 200 million (part of a total 300 million framework) and lease liabilities with a balance of 19.9 million less the cash and cash equivalents position of 50.3 million.
*)
As defined in section 1.1 of the Terms & Conditions of the Senior Secured Callable Fixed Rate Bonds ISIN: SE0015837794. Please also refer to the Definitions section and the notes of this Interim Report for more information.
Segment Platform
Our Platform segment includes our digital advertising activities and e-Commerce, which are fully integrated through our technology. It generates Net revenue mainly by displaying digital advertisements in both game and non-game content, as well as selling and distributing AAA games through our e-commerce channels. Platform is also integrated with parts of our Premium Games segment, leveraging inter-segment synergies.
Platform Selected Financial KPIs
4.0%
2.8%
Platform Net revenue of 89.3 million in Q1 2023, an increase of 23.2% compared to Q1 2022, driven by increases in product offerings to advertisers across the globe, primarily due to previous acquisitions.
Adjusted EBITDA was 3.6 million in Q1 2023, increasing by 80% compared to Q1 2022, mainly reflecting growth in revenue as well as lower operating expenses resulting from integration of previous acquisitions and related efficiencies.
Results also benefited from increased user engagement levels, with users spending more time playing casual games, as well as strong performance in e-Commerce. In addition, we have grown our casual games distribution portfolio during Q1 2023, adding approximately 437 new games and 50 new publishers partners.
Advertising - Selected Operational KPIs
11.2
1)
The reporting of average digital ads sold per month has been temporarily discontinued due to ongoing integration of operational reporting data from acquisitions completed in the second half of 2022.
The Average gross revenue per million processed ad requests was 11.2 in Q1 2023, compared to 8.6 in Q1 2022, demonstrating our ability to manage the advertising auction platform efficiently and profitably.
This measure excludes ad requests that are rejected before entering our advertising auction platform Improve Digital.
Segment Premium Games
Our Premium Games segment includes social games and metaverse, comprising nine premium game titles. The segment generates revenue mainly by offering users the ability to make in-game purchases for extra features and virtual goods to enhance their gameplay experience. The aim of this segment is to stimulate social interaction among players and build communities, offering an extended value proposition to advertisers and generating cross-selling opportunities with the Platform segment.
Premium Games Selected Financial KPIs
Financial results - Premium Games
0.45
0.42
The Average time in game per day from our Premium Games players increased in Q1 2023 compared to Q1 2022 due to increased audience engagement with our Social Card game titles.
The Average daily active users (DAUs) remained at a similar level as in Q1 2022.
The Average revenue per daily active user (ARPDAU) increased by more than 10% compared to Q1 2022, primarily driven by new features and events that enhance user gameplay experience and monetisation of players.
Outlook
Previously provided guidance remains unchanged:
Adjusted EBITDA for 2023 is expected to be at least EUR 75 million, with annual Adjusted EBITDA margin thereafter expected to grow and be in the range of 14% to 16% in the medium term. The expected improvement in Adjusted EBITDA margin is expected to be primarily driven by gross profit margin optimisation, cost efficiencies and overall benefits of scale as the Azerion platform grows. This outlook does not include the impact of any material acquisitions or divestments.
Net revenue for 2023 is expected to be around EUR 560 million, with expected annual growth thereafter of around 15% in the medium term. This outlook does not include the impact of any material acquisitions or divestments.
Other information
(8.1)
Restructuring
In relation to ongoing consolidation and integration, restructuring charges in Q2 2023 are expected to be in the range of 4 million to 5 million. These costs impact the reported operating profit / loss, but are removed from Adjusted EBITDA.
Settlement
In May 2023 a claim was settled resulting in a cash outflow of about 0.4 million and in a gain of about 0.7 million due to a release of a provision in segment Platform in Q2 2023.
Bond Refinancing
On 8 April 2021, the Group issued senior secured callable fixed rate bonds for a total of 200 million, within a total framework amount of 300 million. The maturity date of the bonds is 28 April 2024 and the bonds carry a fixed interest rate of 7.25% per annum. The management team are fully engaged in evaluating the options available to refinance the bonds. Those options inc
Wednesday, May 31, 2023 at 12:00 am